aw gov 2 - worried, however, as to the governments lack of...

'Pay Day' Article Summary The article "Pay Day: Why it makes sense to worry about executive compensation" by Irwin Stelzer details the federal government's involvement in executive compensation for banks and other companies who received federal bailout money. The appointment of "pay czar" Kenneth Feinberg and his nearly totalitarian power over bonus incentives have the financial community up in arms. Feinberg's decisions, even specific to one particular company, "will essentially serve as an outer boundary for what the law allows." (J. Mark Poerio, financial consultant) Government regulation of executive pay was implemented in order to coerce financial companies towards a less risk-based approach to business. Bonuses are now given out in the form of restricted shares, with longevity in mind. They cannot be sold immediately without losing a large percentage of their value, thus persuading executives to work towards the long term growth and financial health of their respective companies. The plan has financial insiders

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Unformatted text preview: worried, however, as to the governments lack of expertise on setting compensation restrictions. Also, in companies like CitiGroup, that suffered losses, penalizing the bonuses of the executives may well cause them to leave for better paying jobs. The ailing companies may well need the bigger bonuses, and this is not being addressed by Feinberg and his ilk. The broad issue, it seems, is being overlooked. Restrictions on executive compensation will not fix the overarching problems within the financial sector, which have a basis in the need for excessive risk taking for huge profits. The government is unable or unwilling to push for a complete restructuring of the economic system, and instead is implementing restrictions on individuals income, something that may do more harm than good. Two things are clear on the issue: that something has to be done, and that no one knows yet what that something is....
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